Reg. No. : ........................................

D 503 Q.P. Code : [07 DMB 03]

(For the candidates admitted from 2007 onwards)

M.B.A./EXECUTIVE M.B.A. DEGREE

EXAMINATION, MARCH 2021.

First Year/First Semester

ACCOUNTING AND FINANCE FOR MANAGERS

Time : Three hours Maximum : 100 marks

Answer any FIVE questions.

(5 20 = 100)

1. Discuss the accounting principles in detail.

2. Explain Inter-firm comparison and intra-firm

comparison with suitable examples.

3. What is a cost sheet? Illustrate with a suitable

example. Also give the specimen format of a cost
sheet.

4. X Company Ltd is considering three different

plans to finance its total project cost of
Rs.100 lakhs.
 They are
(a) Plan A: Equity (Rs.100 per share) – 50 lakhs
Debt (8% Debentures) – 50 lakhs
(b) Plan B: Equity (Rs.100 per share) – 34 lakhs
Debt (8% Debentures) – 66 lakhs
(c) Plan C: Equity (Rs.100 per share) – 25 lakhs
Debt (8% Debentures) – 75 lakhs
Sales for the first three years of operations an
estimated at Rs.100 lakhs, Rs.125 lakhs and
Rs.150 lakhs and a 10% profit before interest and
taxes is forecasted to be achieved. Corporate
taxation to be taken at 50%. Compare earnings
per share in each of the alternative plans of
financing for the three years.

5. What do you understand by “Financing of Working

Capital”? Explain in detail.

6. What is a fund flow statement? Explain its uses,

significance and limitations.

7. Following information is taken from the records of

a limited company:
Installed capacity : 1000 units
Operating capacity : 800 units
Selling price per unit : Rs.10
Variable cost per unit : Rs.7

2 D 503
 Calculate operating leverage under the following
situations:
Fixed cost:
Situation A – Rs.800
Situation B – Rs.1,200
Situation C – Rs.1,500
Particulars Situation Situation Situation
A B C
Rs. Rs. Rs.
Sales 8,000 8,000 8,000
Less: Variable cost 5,600 5,600 5,600
Contribution (C) 2,400 2,400 2,400
Less: Fixed Cost (F) 800 1,200 1,500
Operating Profit (OP) 1,600 1,200 900
Operating leverage 2,400 2,400 2,400
(C/OP)
1,600 1,200 900
1.5 2 2.67
A 10 per cent increase in sales would be
accompanied by an increase in operating profits of
15% in situation A, 20% in situation B and 26.7%
in situation C. Situation C is of high operating
leverage since the operating profit will increase by
one 2 1 2 time (26.7% for every 10% increase in
Sales). This is high risk situation too because a
small decrease in sales will result in more
decrease in profits.

8. Explain in brief all aspects of management of cash

in a business organization.
–––––––––––––
3 D 503